Monthly Policy Review July 2021 Highlights of this Issue Monsoon Session 2021 begins: 26 Bills listed for passing (p. 2) The Monsoon Session 2021 began on July 19, 2021 and is scheduled to have 19 sittings. Bills listed for passing include the IBC (Amendment) Bill, 2021, Essential Defence Services Bill, 2021, and the Inland Vessels Bill, 2021.

Three Bills passed by Parliament; four Bills passed by one House (p. 2) Bills passed by Parliament include Juvenile Justice Amendment Bill, 2021, IBC (Amendment) Bill, 2021, and Factoring Regulation (Amendment) Bill, 2020. Bills passed by Lok Sabha include Inland Vessels Bill, 2021.

Eight Bills introduced in Parliament (p. 2) Six Bills were introduced in Lok Sabha, including the General Insurance Business (Nationalisation) Amendment Bill, 2021, and Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021.

Retail inflation at 5.6% in the April-June quarter of 2021-22 (p. 3) Consumer Price Index inflation increased from 4.2% in April 2021 to 6.3% in June 2021. Wholesale Price Index inflation increased from 10.7% in April 2021 to 12.1% in June 2021.

First Supplementary Budget for 2021-22 passed by Lok Sabha (p. 4) Rs 23,675 crore of incremental cash outgo has been approved (0.7% of the 2021-22 budget estimate). Of this, Rs 15,750 crore will be spent on the COVID-19 emergency response and health system preparedness package.

Supreme Court strikes down some provisions of 2021 Tribunals Reforms Ordinance (p. 15) The provisions specifying a four-year term for members and minimum age requirement of 50 years for their appointment were struck down.

Standing Committees on Labour, Commerce and Industry examine various subjects (p. 16) The Committees submitted reports on the impact of COVID-19 on small businesses, intellectual property rights regime, and the functioning of National Institutes of Fashion Technology.

Standing Committee on Transport and Tourism submit reports on various subjects (p. 9) The Committee submitted reports on subjects including status of aviation connectivity, role of National Highways, development of tourist spots, and development and conservation of museums and archaeological sites.

Reservation for OBCs and EWS approved in Quota Scheme on students of medicine (p. 19) The Ministry of Health and Family Welfare approved 27% reservation for Other Backward Classes, and 10% reservation for Economically Weaker Section in the All-India Quota Scheme for students of medicine and dentistry.

National Mission to achieve universal literacy and numeracy by 2026-27 launched (p. 19) The Mission seeks to equip every child with ability to read, write, perform basic mathematical operations, and learn basic life skills, for children latest by fifth grade.

Retail and wholesale trade activities eligible for MSME classification (p. 17) Retail and wholesale trade activities have been included back in the list of activities eligible for MSME after being excluded in 2017. Benefit to these sectors will be restricted to priority sector lending only.

Comments invited on draft Drone Rules (p. 11) The draft Rules cap the weight of drones at 500 kilogram, remove license requirements for student remote pilots, and enable the central government to publish a machine-readable airspace map for India.

August 2, 2021 PRS Legislative Research◼ Institute for Policy Research Studies 3rd Floor, Gandharva Mahavidyalaya ◼ 212, Deen Dayal Upadhyaya Marg ◼ New Delhi – 110002 Tel: (011) 43434035, 23234801 ◼ www.prsindia.org

Monthly Policy Review – July 2021 PRS Legislative Research

Parliament COVID-19 As of July 31, 2021, there were 3,16,55,824 Shruti Gupta ([email protected]) confirmed cases of COVID-19 in India.2 Of these, 3,08,20,521 (97%) had been Parliament’s Monsoon Session 2021 cured/discharged and 4,24,351 (1%) persons had commences died. As of July 31, 2021, 36,68,06,160 people The Monsoon Session 2021 of Parliament have received the first dose of a vaccine, and commenced on July 19, 2021.1 It is scheduled to 10,34,92,436 people have been fully vaccinated.3 have 19 sittings and conclude on August 13, For details on the number of daily cases in the 2021. 26 Bills are listed for consideration and country and across states, please see here. passing during this session. These include the With the spread of COVID-19, the central DNA Technology (Use and Application) government has announced several policy Regulation Bill, 2019, the Maintenance and decisions to contain the spread, and financial Welfare of Parents and Senior Citizens measures to support citizens and businesses who (Amendment) Bill, 2019, and the Assisted would get affected. For details on the major Reproductive Technology (Regulation) Bill, notifications released by centre and the states, 2020. So far, four Bills have been passed by please see here. Key announcements made in Parliament. These are: (i) the Juvenile Justice this regard in July 2021 are as follows. (Care and Protection of Children) Amendment Bill, 2021, (ii) the Factoring Regulation Guidelines issued to state governments for (Amendment) Bill, 2020, (iii) the Marine Aids to Navigation Bill, 2021, and (iv) the National management of COVID-19 pandemic Institutes of Food Technology, Entrepreneurship Omir Kumar ([email protected]) and Management Bill, 2021. In June 2021, the Ministry of Home Affairs had Of the 26 Bills listed for passing, 17 Bills are issued guidelines to state and union territory proposed to be introduced during the session. governments regarding the management of These include three Bills to replace Ordinances: COVID-19 pandemic.4 These guidelines were (i) the Insolvency and Bankruptcy Code originally applicable till July 2021.5 The (Amendment) Bill, 2021, (ii) the Essential applicability of these guidelines has been Defence Services Bill, 2021, and (iii) the extended till August 31, 2021.4 Commission for Air Quality Management in National Capital Region and Adjoining Areas The Ministry has been revising these guidelines Bill, 2021. Eight Bills have been introduced in periodically since the onset of the COVID-19 Parliament so far, including the Inland Vessels pandemic. Key requirements for states and Bill, 2021, the General Insurance Business union territories under the guidelines include: (i) (Nationalisation) Amendment Bill, 2021, and adequate testing and tracking of COVID cases, Deposit Insurance and Credit Guarantee (ii) establishing evidence-based framework to Corporation (Amendment) Bill, 2021. identify containment zones, and (iii) adherence to COVID appropriate behaviour (social So far, Lok Sabha has passed three Bills that are distancing, use of face covers, and work from now pending in Rajya Sabha: (i) the Airports home measures).6 Key features of the guidelines Economic Regulatory Authority of India include the following: (Amendment) Bill, 2021, (ii) the Insolvency and Bankruptcy Code (Amendment) Bill, 2021, and ▪ Principles for relaxing restrictions: The (iii) the Inland Vessels Bill, 2021. In addition, guidelines recommend implementing any the Lok Sabha approved the supplementary relaxation in movement restrictions based budget for 2021-22 (a cash outgo of Rs 23,675 on: (i) the case positivity rate (number of crore). Rajya Sabha has passed the Coconut positive cases out of samples tested), and (ii) Development Board (Amendment) Bill, 2021, occupancy/ availability of health which is now pending in Lok Sabha. Rajya infrastructure (such as hospital and ICU Sabha also had a short-duration discussion on the beds and oxygen supply). management of the COVID-19 pandemic. ▪ Monitoring: The guidelines recommend For more details on the legislative agenda for the monitoring the status of classification of Monsoon Session 2021, please see here. each district on a weekly basis. States and union territories may monitor districts with higher numbers of active cases per million population. The monitoring may be used as

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an indicator to predict areas where health Protocol was originally applicable up to infrastructure must be upgraded. November 10, 2020, and was later extended for another six months, up to May 10, 2021.12 It has Second Phase of COVID-19 Emergency now been further extended for another 12 Response and Health Systems months, i.e., up to May 10, 2022.13 Preparedness Package approved The Aarogya Setu app was launched by the Omir Kumar ([email protected]) central government in April 2020 to enable contact tracing (identification and monitoring of The Union Cabinet approved the second phase of persons who are at a higher risk of being infected the COVID-19 Emergency Response and Health by COVID-19) and for users to assess their own System Preparedness Package.7 The first phase risk of getting infected. The Protocol aims to of the scheme was announced in March 2020.8 ensure secure and efficient collection and sharing The second phase of the scheme aims to of data by the application to protect the personal accelerate health system preparedness for early data of individuals. detection, prevention, and management of COVID-19 with focus on paediatric care. Financial outlay for the second phase is Rs Macroeconomic Development 23,123 crore for the year 2021-22. This includes: (i) Rs 15,000 crore under central share, Tushar Chakrabarty ([email protected]) and (ii) Rs 8,123 crore under state share.7 Retail inflation at 5.6% in April-June Eligibility of passengers under India-USA quarter of 2021-22 air bubble revised Consumer Price Index (CPI) inflation increased Omir Kumar ([email protected]) from 4.2% in April 2021 to 6.3% in June 2021 (year-on-year).14 CPI measures the change in The Ministry of Civil Aviation revised the prices of items at the retail level. The CPI basket eligibility of passengers travelling in flights includes items commonly consumed by under India - United States America (USA) air households, such as food items, fuel, clothing, bubble arrangement.9 This air bubble housing, and health services. Food and arrangement was created in September 2020.10 beverages have a share of 46% in the CPI basket. An air bubble refers to temporary arrangements Food inflation increased from 1.9% in April between the two countries for restarting 2021 to 5.2% in June 2021. commercial passenger services while regular Wholesale Price Index (WPI) inflation increased international flights remain suspended due to the from 10.7% in April 2021 to 12.1% in June 2021 COVID-19 pandemic.10 (year-on-year).15 WPI measures the average Earlier, stranded Indian nationals, Overseas change in the prices of commodities for bulk sale Indian Citizen (OCI) cardholders (those with a at the early stage of transactions. USA passport), and foreign nationals (if eligible Figure 1: Inflation trends in Q1 2021-22 (% as per the Ministry of Home Affairs) were change, year-on-year) eligible to travel to India through the air bubble. 12.9% 15% 12.1% The revised eligibility criteria (i) remove the 10.7% 6.3% condition of having a USA passport for OCI 10% 5.2% 6.3% cardholders, and (ii) allow a Person of Indian 4.2% 5.0% Origin (PIO) and any foreign national to travel to 5% 2.0% India for any purpose. 0% CPI inflation Food inflation WPI inflation Aarogya Setu Data Access and Knowledge Sharing Protocol, 2020 Apr-21 May-21 Jun-21 extended up to May 2022 Sources: MOSPI; Ministry of Commerce and Industry; PRS. Omir Kumar ([email protected])

In May 2020, the Ministry of Electronics and Information Technology had released the Aarogya Setu Data Access and Knowledge Sharing Protocol, 2020 in reference to the Aarogya Setu mobile application (app).11 The

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Finance collection would be insufficient for meeting the compensation requirement of states.17 First Supplementary Budget for 2021-22 passed by Lok Sabha Factoring Regulation (Amendment) Bill, Suyash Tiwari ([email protected]) 2021 passed by Parliament Tushar Chakrabarty ([email protected]) The first Supplementary Demands for Grants (DFG) for 2021-22 was passed by Lok Sabha.16 The Factoring Regulation (Amendment) Bill, The Supplementary DFG propose an incremental 2021 was passed by Parliament.18 It was cash outgo of Rs 23,675 crore, an increase of introduced in Lok Sabha in September 2020. 0.7% in expenditure over the budget estimate of The Bill amends the Factoring Regulation Act, 2021-22 (Rs 34,83,236 crore). This additional 2011 to widen the scope of entities which can amount will be spent on various areas, including: engage in the factoring business. Factoring is a business where an entity (referred as factor) ▪ COVID-19: Rs 15,750 crore is estimated to acquires the receivables of another entity be spent on the COVID-19 Emergency Response and Health System Preparedness (referred as assignor) for an amount. Key Package. The Package aims to strengthen features of the Bill include: the emergency preparedness of the public ▪ Change in the definition of receivables: health system. These funds will be used for The Act defines receivables as the monetary expenditure on salaries, grants to hospitals sum which is the right of a person under a and medical institutions, and procurement of contract (all or part of the sum or the medical supplies, equipment, and other undivided interest in the sum). This right facilities. Of the total amount, Rs 12,207 may be existing, arise in the future, or crore will be given as grants to states and contingent arising from use of any service, union territories under the National Rural facility, or otherwise. The Bill amends the Health Mission. In addition to the Package, definition of receivables to mean any money Rs 526 crore will be provided to the Indian owed by a debtor to the assignor for toll or Council of Medical Research (ICMR) to for the use of any facility or services. meet the expenditure incurred in emergency epidemic preparedness and response. ▪ Change in the definition of factoring business: The Act defines a factoring ▪ Insurance: Rs 714 crore is estimated to be business to mean the business of: (i) incurred in providing insurance cover (of up acquisition of receivables of an assignor by to Rs 50 lakh per person) to health workers accepting assignment of such receivables, or fighting COVID-19, under the Pradhan (ii) financing against the security interests of Mantri Garib Kalyan Package. any receivables through loans or advances. ▪ Loans to Air India: Rs 1,872 crore will be The Bill amends this definition to define factoring business as acquisition of provided as loans to Air India (through receivables of an assignor. repayment of the loans and advances issued to Air India from the Contingency Fund). ▪ Registration of factors: Under the Act, no ▪ Interest waiver: Rs 1,750 crore is estimated company can engage in factoring business to be spent towards waiver of the compound without registering with the Reserve Bank of interest (i.e., interest charged on interest) India (RBI). For a Non-Banking Financial Company (NBFC) to engage in a factoring dues of borrowers during the loan business, its: (i) financial assets in the moratorium period in 2020-21. factoring business and (ii) income from the In addition to the incremental cash outgo of Rs factoring business should both be more than 23,675 crore, gross expenditure of Rs 1,63,527 50% of the gross assets/ net income (or more crore was also approved in the Supplementary than a threshold notified by RBI). The Bill DFG. This gross expenditure does not require removes this threshold for NBFCs to engage any additional cash outgo from the Consolidated in the factoring business. Fund and will be met by the government through its savings, or increased revenue and recoveries. For a PRS summary of the Bill, please see here. 97% of the gross expenditure (i.e., Rs 1,59,000 The Standing Committee on Finance (Chair: Mr. crore) will be used for providing back-to-back Jayant Sinha) submitted its report on the Bill in loans to states in lieu of the GST compensation February 2021.19 It recommended that the Bill grants for 2021-22. The loans are being be amended to mandate the listing of receivables provided to states as the GST compensation cess from central and state governments on the Trade Receivables Discounting System (TReDS)

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platform. This would ensure payments pending be invited if the base plan: (i) is not from the government to MSMEs are made approved by the committee, or (ii) is unable available on a timely basis. It also recommended to pay the debt of operational creditors integrating the TReDS platform with the GST e- (claims for provision of goods or services). invoicing portal to enable automatic uploading of ▪ A resolution plan must be approved by the all GST invoices and real-time access to committee (with at least 66% of the voting invoices. It noted that this would add a layer of shares) within 90 days from the PIRP authenticity making the TReDS platform commencement date. The resolution plan attractive for factors, and improve the flow of approved by the committee will be credit to MSMEs examined by the NCLT. If no resolution For a PRS summary of the Standing Committee plan is approved by the committee, the RP report, please see here. may apply for the termination of PIRP. The authority must either approve the plan or Insolvency and Bankruptcy Code order termination of PIRP within 30 days of (Amendment) Bill passed by Lok Sabha receipt. Termination of PIRP will result in the liquidation of the debtor. Tushar Chakrabarty ([email protected]) For a PRS summary of the Bill, please see here The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was passed by Lok Deposit Insurance and Credit Guarantee Sabha.20 The Bill amends the Insolvency and Corporation (Amendment) Bill, 2021 Bankruptcy Code, 2016, which provides for a introduced in Rajya Sabha time-bound process for resolving the insolvency of corporate debtors (within 330 days) called the Suyash Tiwari ([email protected]) Corporate Insolvency Resolution Process (CIRP). The Bill introduces an alternate The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 was insolvency resolution process for Micro, Small, 22 And Medium Enterprises (MSMEs), called the introduced in Rajya Sabha. The Bill amends pre-Packaged Insolvency Resolution Process the Deposit Insurance and Credit Guarantee (PIRP). It replaces the Ordinance promulgated Corporation Act, 1961. The Act established the Corporation to provide insurance for bank in April 2021.21 Key features of the Bill include: deposits and guarantee credit given by banks and ▪ PIRP initiated by debtor: Unlike CIRP, financial institutions. The Bill seeks to provide PIRP may be initiated only by debtors. The depositors time-bound access to their insured debtor should have a base resolution plan in deposit amount, in case they are restricted from place before seeking approval from its accessing their bank deposits. financial creditors for filing an application to initiate PIRP. The debtor needs to obtain the ▪ Under the Act, the Corporation is liable to approval of financial creditors who represent pay the insured deposit amount to depositors at least 66% of the financial debt. During of an insured bank. Such liability arises PIRP, the management of the company will when an insured bank undergoes: (i) remain with the debtor. liquidation, (ii) reconstruction or any other arrangement under a scheme, or (iii) merger ▪ Minimum default amount: Application for or acquisition by another bank (transferee initiating PIRP may be filed in the event of a bank). Once the Corporation makes the default of at least one lakh rupees. The payment to the depositors, the liquidator or central government may increase the the insured or transferee bank (as the case threshold of minimum default to up to one may be) becomes liable to repay the same crore rupees through a notification. amount to the Corporation. ▪ Proceedings under PIRP: The debtor will ▪ Interim payment to depositors: The Bill submit the base resolution plan to the adds that the Corporation will be liable to resolution professional within two days of pay the insured deposit amount to depositors the commencement of PIRP. A committee on an interim basis. The liability will arise of creditors will be constituted within seven on the date the depositors are restricted from days of the PIRP commencement date to accessing their bank deposits. This liability consider the base resolution plan. The will arise if such restrictions get imposed committee may provide the debtor with an under any order or scheme under the opportunity to revise the plan. The RP may Banking Regulation Act, 1949. This will also invite resolution plans from other also apply if such order or scheme is made persons. Alternative resolution plans may before the enactment of the Bill, but the

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business of the insured bank remains ▪ Transfer of control from the suspended at the time of enactment. government: The Bill provides that the Act will not apply to the specified insurers ▪ Timeline for interim payment: The Bill from the date on which the central mandates the Corporation to pay the insured government relinquishes control of the amount to the depositors within 90 days of insurer. Control means: (i) the power to the date such liability arises. Within the first appoint a majority of directors of a 45 days, the insured bank must furnish the specified insurer, or (ii) to have power over details of all outstanding deposits to the its management or policy decisions. Corporation. Within 30 days of the receipt of details, the Corporation will verify the ▪ The Act empowers the central government authenticity of claims and check with each to notify the terms and conditions of depositor if they are willing to receive the service of employees of the specified insured deposit amount. Within 15 days of insurers. The Bill provides that schemes the verification, the Corporation must make formulated by the central government in the payment to such depositors. this regard will be deemed to have been adopted by the insurer. The board of ▪ The date on which the Corporation becomes directors of the insurer may change these liable to pay the depositors may be schemes or frame new policies. Further, extended by an additional 90 days. The powers of the central government under extension may be given if RBI finds it such schemes (framed under the Act) will expedient for finalising a scheme for the be transferred to the board of directors of reconstruction, arrangement, merger, or the insurer. acquisition of the insured bank. For a PRS summary of the Bill, please see here. For a PRS summary of the Bill, please see here.

The Limited Liability Partnership The General Insurance Business (Amendment) Bill, 2021 introduced (Nationalisation) Amendment Bill, 2021 introduced in Lok Sabha Tushar Chakrabarty ([email protected])

Tushar Chakrabarty ([email protected]) The Limited Liability Partnership (Amendment) Bill, 2021 was introduced in The General Insurance Business Rajya Sabha.25 The Bill seeks to amend the (Nationalisation) Amendment Bill, 2021 was Limited Liability Partnership Act, 2008.26 The 23 introduced in Lok Sabha. The Bill seeks to Act provides for regulation of limited liability amend the General Insurance Business partnerships (LLP). LLP is an alternative 24 (Nationalisation) Act, 1972. The Act was corporate body form to traditional partnership enacted to nationalise all private companies firms. Under LLP, a partner’s liabilities are undertaking general insurance business in India. limited to their investment in the business. The The Bill seeks to provide for a greater private Bill converts certain offences into civil defaults sector participation in the public sector insurance and change the nature of punishment for these companies regulated under the Act. The 1972 offences. It also defines small LLP, provides Act set up the General Insurance Corporation of for appointment of certain adjudicating officers, India (GIC). The businesses of the companies and establishment of special courts. Key nationalised under the Act were restructured in features of the Bill include: four subsidiary companies of GIC: (i) National Insurance, (ii) New India Assurance, (iii) ▪ Certain offences decriminalised: The Oriental Insurance, and (iv) United India Act specifies the manner of operations of Insurance. The Act was subsequently amended LLPs, and provides that violating these in 2002 to transfer the control of these four requirements will be punishable with a fine subsidiary companies from GIC to the central (ranging between two thousand rupees and government, thereby making them independent five lakh rupees). These requirements companies. Since 2000, GIC exclusively include: (i) changes in partners of the LLP, undertakes reinsurance business. Key features of (ii) change of registered office, (iii) filing the Bill include: of statement of account and solvency, and annual return, and (iv) arrangement ▪ Government shareholding threshold: The between an LLP and its creditors or Act requires that shareholding of the central partners, and reconstruction or government in the specified insurers (the amalgamation of an LLP. The Bill above five companies) must be at least 51%. decriminalises these provisions and The Bill removes this provision. imposes a monetary penalty.

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▪ Change of name of LLP: The Act states the ITFS along with documents specific to that the central government may direct an authorised personnel. Such personnel would LLP to change its name on certain grounds be provided with user credentials for (such as the name being undesirable or authorisations for the platform. identical to a trademark pending ▪ A one-time agreement will be drawn up registration). Failing to comply with such between ITFS and participants including direction is punishable with a fine ranging financiers and importers. This will govern from Rs 10,000 to five lakh rupees. The the various terms and conditions of dealings Bill removes some of these grounds, and between these entities. empowers the central government to allot a new name to such an LLP instead of levying a fine. Details of the Retail Direct Scheme released by RBI ▪ Punishment for fraud: Under the Act, if an LLP or its partners carry out an activity Tushar Chakrabarty ([email protected]) to defraud their creditors, or for any other fraudulent purpose, every person party to it The Reserve Bank of India (RBI) released details knowingly is punishable with of the Retail Direct Scheme which has been imprisonment of up to two years and a fine designed as a one-stop solution to facilitate between Rs 50,000 and five lakh rupees. investment by individual investors in 28 The Bill increases the maximum term of government securities. The facility was imprisonment from two years to five years. announced by RBI in February 2021 to improve ease of access for retail investors to government For a PRS summary of the bill, please see here. securities market.29 The investors will be required to open and maintain a Retail Direct Framework for setting up international Gilt account (an account for government trade financing services released securities) with the RBI. The scheme will provide investors access to primary as well Tushar Chakrabarty ([email protected]) secondary market of government securities. Key details of the scheme include: The International Financial Services Centres Authority has released a framework for setting ▪ Types of securities: For the purposes of this up International Trade Financing Services scheme, government securities include Platform (ITFS) at the international financial treasury bills, dated securities, sovereign services centres.27 These platforms will provide gold bonds, and state development loans. an electronic channel for facilitating the trade ▪ Eligibility: In order to register under the finance requirements of exporters and importers, scheme and maintain a Retail Direct Gilt through multiple financiers. account, investors must complete ▪ Permissible Activities: The Exporters, requirements related to know-your- importers, financiers, and insurance/credit customer. The scheme will also be open to guarantee institutions can undertake non-resident retail investors who are eligible activities related to trade finance such as to invest in government securities under the export invoice trade financing, reverse trade Foreign Exchange Management Act, 1999. financing, bill discounting under letter of No fee will be charged for opening and credit, export credit, and insurance and maintaining Retail Direct Gilt account with credit guarantee. RBI. Fee will also not be charged by the Clearing Corporation of India Limited for ▪ Eligibility criteria: The parent entity or submitting bids in primary auction. promoter of the company applying to set up an international trade financing services platform should have a minimum net worth Amendments to the regulations on of ten lakh dollars. The company to be set registration of Indian insurance up as the trade financing services platform companies notified shall have a minimum paid up equity capital Tushar Chakrabarty ([email protected]) of two lakh dollars. ▪ On-boarding of participants: On-boarding The Insurance Regulatory and Development of exporters, importers, financiers and Authority of India notified amendments to the insurance/credit guarantee institutions and Insurance Regulatory and Development other eligible entities on the ITFS will be Authority (Registration of Indian Insurance 30,31 mandatory. They will be required to submit Companies) Regulations, 2000. The know your customer-related documents to amendments require certain key management

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persons of an Indian insurance company with investors associated with the flow of such funds. foreign investment to be Indian citizens. It also This is done to protect existing investors from adds some requirements for such companies with the dilution of their holdings in mutual funds. foreign investment in excess of 49%. SEBI has proposed to implement the framework These amendments are aimed at harmonising the of swing pricing for open-ended debt schemes. provisions with the Insurance (Amendment) Act, In an open-ended scheme, investors can buy and 2021.32 The 2021 Act increased the limit on sell units on a continuous basis. Debt schemes foreign investment in an Indian insurance company invest in fixed income assets such as government from 49% to 74%, and removed certain restrictions and corporate bonds. The consultation paper on ownership and control. Key amendments to the suggests that during normal times, swing pricing 2000 regulations include: will be optional. During market dislocation, it will be implemented in a phased manner. ▪ Independent directors: The amendments Redemptions up to two lakh rupees for all specify that an Indian insurance company investors, and up to five lakh rupees for senior with more than 49% foreign investment, citizens are proposed to be exempt from the should have at least 50% independent swing pricing framework. directors on its board. If the chairperson of the board is an independent director, then, at Comments on the consultation paper are invited least one-third of the board positions must by August 20, 2021. comprise independent directors ▪ In an Indian insurance company with any foreign investment, a majority of its directors, key management persons, and at Transport least one person among the chairperson of The Marine Aids to Navigation Bill, 2021 the board, managing director or chief passed by Parliament executive officer shall be an Indian citizen and resident. Shruti Gupta ([email protected])

▪ General reserve: An Indian insurance The Marine Aids to Navigation Bill, 2021 was company with more than 49% foreign passed by Rajya Sabha.34 Note that the Bill was investment must retain at least 50% of the passed by Lok Sabha in March 2021. The Bill net profit in general reserve. This will apply seeks to provide a framework for the if, in a financial year, it pays dividend on development, maintenance, and management of equity shares, and the solvency margin in aids to navigation in India. It repeals the that year for the insurer is less than 1.2 times Lighthouse Act, 1927, which provides for the the control level of solvency. Solvency maintenance and control of lighthouses in margin is the excess of assets over liabilities India.34 Key features of the Bill include: of an insurance company. Regulatory action may be taken if a company breaches control ▪ Application: The Bill applies to the whole of level of solvency. India including various maritime zones including territorial waters, continental shelf, SEBI releases consultation paper on and exclusive economic zone. introduction of swing pricing mechanism ▪ Aid to navigation: The Bill defines aid to in mutual fund schemes navigation as a device, system, or service, Tushar Chakrabarty ([email protected]) external to the vessels designed and operated to enhance the safety and efficiency of The Securities and Exchange Board of India navigation of vessels and vessel traffic. (SEBI) released a consultation paper on the ▪ Management of General Aids to Navigation introduction of swing pricing mechanism.33 This and vessel traffic services: The central seeks to ensure fair treatment of investors in government will be responsible for the mutual fund schemes, particularly during market development, maintenance, and management dislocation. Mutual funds pool money from a of all general aids to navigation and vessel large number of investors and use the funds to traffic services. Its powers with regard to the invest in stocks and bonds. Dislocation in management of aids to navigation include: (i) financial markets occurs when assets are not establishing, maintaining, adding, altering, or priced correctly as the markets are operating removing any aid to navigation, and (ii) under stress. Swing pricing refers to adjusting a authorising to inspect any such aid which may fund’s net asset value to pass on transaction costs affect the safety of navigation. related to inflow or outflow of funds to the

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▪ Training and certification: The Bill states navigation across the country. Key features of that no person shall be allowed to operate on the Bill include: any aid to navigation (including any ancillary ▪ Mechanically propelled inland vessels: activities), or any vessel traffic service in any The Bill defines such vessels to include place unless he holds a valid training ships, boats, sailing vessels, container certificate. The central government will vessels, and ferries. For such vessels, the accredit training organisations for imparting central government will prescribe the: (i) training to, or conduct assessments of persons classification, (ii) standards of design, in the operation of aids to navigation. construction, and crew accommodation, and ▪ Penalties: The Bill provides certain offences (iii) type and periodicity of surveys. and penalties. For instance: (i) intentionally Construction or modification of the vessels causing obstruction of, reduction in, or will require prior approval of a designated limitation of, the effectiveness of any aid to authority, which will be prescribed by the navigation will be punishable with central government. imprisonment of up to six months, or a fine up ▪ Operation: To operate in inland waters, all to one lakh rupees, or both. such vessels must have a certificate of For a PRS summary of the Bill, please see here. survey, and a certificate of registration. Vessels with Indian ownership must be The Airports Economic Regulatory registered with the Registrar of Inland Authority of India (Amendment) Bill, Vessels (appointed by the state government). 2021 passed by Lok Sabha The registration certificate will be valid across the country. The certificate of survey Shruti Gupta ([email protected]) will be granted by state governments, in a form as prescribed by the central The Airports Economic Regulatory Authority of government. This certificate will indicate India (Amendment) Bill, 2021 was passed by the inland water zones (areas of operation to Lok Sabha.35 It amends the Airports Economic be demarcated by states) for such vessels. Regulatory Authority of India Act, 2008. The The vessels must also have an insurance 2008 Act established the Airport Economic policy to cover liability for death, injury, or Regulatory Authority (AERA). AERA regulates damage caused due to the usage of the tariffs and other charges (such as airport vessel (including accidental pollution). development fees) for aeronautical services at major airports in India. ▪ Database on inland vessels: The central government will maintain an electronic The 2008 Act designates an airport as a major centralised record of data on inland vessels. airport if it has an annual passenger traffic of at These records will include information on: least thirty-five lakh. The central government (i) registration of vessels, (ii) crew and may also designate any airport as a major airport manning, and (iii) certificates issued. by a notification. The Bill adds that the central government may group airports and notify the For a PRS summary of the Bill, please see here. group as a major airport. Standing Committee submits report on Note that the Bill was examined by the Standing status of aviation connectivity Committee on Transport, Tourism, and Culture, which did not recommend any changes to it.36 Shubham Dutt ([email protected])

For a PRS summary of the Bill, please see here. The Standing Committee on Transport, Tourism and Culture (Chair: Mr. T.G. Venkatesh) The Inland Vessels Bill, 2021 introduced submitted its report on the Status of Aviation in Lok Sabha Connectivity in the country.39 Key observations Rajat Asthana ([email protected]) and recommendations of the Committee include: ▪ Post-COVID scenario: The Committee The Inland Vessels Bill, 2021 was introduced in took note of the severe impact of the COVID- Lok Sabha.37 It replaces the Inland Vessels Act, 19 pandemic on India’s aviation sector, 1917.38 The Act provides for the regulation of which was growing at a rate of 14% annually inland vessel navigation by states including the prior to the pandemic. It recommended the registration of vessels, and safe carriage of goods Ministry of Civil Aviation (MoCA) to: (i) and passengers. The Bill seeks to introduce a suspend all aviation dues and charges in the uniform regulatory framework for inland vessel short term, (ii) make the aviation sector eligible for priority sector lending, and (iii)

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establish a professionally managed sectoral banks in the road sector, the Committee also fund for providing structured debt to the recommended mandating the National airlines industry. Infrastructure Investment Fund and the upcoming Development Finance Institution ▪ Air fares and cancellation fee: The (announced in 2021-22 Budget session) to Committee took note of the exorbitant air facilitate offloading long term infrastructure fares and the high cancellation charges levied loans from banks. by airlines. It recommended that MoCA should fix the upper limit for economy class ▪ Awarding contracts: The Committee noted fares in every sector, and mandate airlines to: that the current practice of awarding road (i) limit the cancellation charge collected projects to the lowest bidder may lead to from passengers to a maximum of 50% of the unrealistic bidding. To ensure quality of road base fare, and (ii) refund the collected tax and construction in contracts, it recommended: (i) fuel surcharge upon cancellation. defining a lower limit below which bids may not be accepted, (ii) maintaining a central ▪ Regional Connectivity Scheme (RCS): database to analyse the quality of work of the RCS-UDAN is a scheme launched by the contractors, (iii) breaking down big projects central government in 2016 to enhance into smaller chunks to attract smaller regional air connectivity. The Committee contractors, and (iv) modifying the procedure noted that though RCS has led to an increase for awarding tenders after consulting the in passenger traffic, air connectivity remains Central Vigilance Commission. largely restricted to routes connecting major cities. Currently, benefits under RCS such as For a PRS summary of the Standing Committee financial support provided to airlines report, see here. operating flights on RCS routes are available for a period of three years. The Committee Standing Committee submits report on recommended extending the benefit period potential of tourist spots in the country by two years to allow airlines to transform less profitable routes into revenue-generating Shubham Dutt ([email protected]) ones. It also recommended operationalising the existing inactive airstrips and airports The Standing Committee on Transport, Tourism owned by the Airport Authority of India and and Culture (Chair: Mr. T.G. Venkatesh) state governments to promote connectivity submitted its report on the ‘Potential of Tourist under RCS. Spots in the country - Connectivity and Outreach’.40 Key observations and For a PRS summary of the Standing Committee recommendations of the Committee include: report, please see here. ▪ Swadesh Darshan Scheme: The Swadesh Standing Committee submitted report on Darshan Scheme (SDS) was launched by the central government in 2015 for the role of highways in nation building integrated development of theme-based Rajat Asthana ([email protected]) tourist circuits in the country. The Committee noted that only one out of the 15 The Standing Committee on Transport, Tourism thematic circuits under the SDS has been and Culture (Chair: Mr. T.G. Venkatesh) completed so far. It recommended: (i) submitted its report on the ‘Role of Highways in developing tourist sites under the Nation Building’. The Committee suggested Himalayan, Buddhist, and North-East ways to reduce bottlenecks in completing circuits on a priority basis, and (ii) including highway projects. Key observations and more rural areas in tourism circuits to recommendations of the Committee include: benefit the poor. ▪ Funding: The Committee observed that the ▪ Air connectivity: The Committee observed National Highway Authority of India (NHAI) that due to poor air connectivity, share of has a large amount of liabilities India in international tourist arrivals is only (approximately 33% of its budget estimates for 1.2%. It recommended ensuring proper air 2021-22). To reduce debt servicing costs of connectivity to iconic tourist sites identified NHAI, the Committee recommended: (i) by the Ministry of Tourism. This can be exploring funding from insurance companies achieved by: (i) converting domestic airports and pensions funds, both Indian and foreign, to international airports on priority basis for and (ii) requesting the RBI to make the road sites with domestic airports only, and (ii) infrastructure sector eligible for priority sector developing new airports for sites without lending Taking note of the stressed assets of direct air connectivity.

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▪ Cruise tourism: To promote cruise tourism The group will advise the government on in India, the Committee recommended: (i) matters including: (i) enhancing airport revamping India’s port infrastructure, (ii) capacity, (ii) modernising and expanding making cruise tourism facilities affordable, airport infrastructure, (iii) improving (iii) providing a complete cruise logistics customer experience in airports, (iv) tariff service, (iv) inviting foreign cruise operators related issues, and (v) advising capital to function in India, and (v) setting up a expenditure performance of export. special government unit for the industry. ▪ Group of cargo, training and ▪ Outreach and publicity: To promote maintenance: The group will be convened domestic tourism, the Committee by the senior Economic Advisor to the recommended adopting digital marketing Ministry. Four sub-groups will operate strategies to increase tourist footfall, with a under the group on matters including: (i) specific media strategy for the North-East. Maintenance, Repair, and Operations, (ii) To promote overseas tourism, the ground handling, (iii) cargo, and (iv) flight Committee recommended: (i) targeting training organisations. The group will foreign tourists through online and offline advise the government on matters marketing, and (ii) setting country-wise including: (i) strategy for growth in these targets of foreign tourist arrivals to cover sectors, (ii) increase participation in air countries with high growth potential. cargo transportation, (iii) create a level playing field for airlines, and (iv) improve For a PRS summary of the Standing Committee aviation services. report, please see here. Comments invited on draft Drone rules Three advisory groups constituted under the Ministry of Civil Aviation Rajat Asthana ([email protected])

Shruti Gupta ([email protected]) The Ministry of Civil Aviation invited public comments on the draft Drone Rules, 2021.44 The The Ministry of Civil Aviation constituted three draft Rules have been published under the advisory groups to address specific issues in the 41,42,43 Aircraft Act, 1934 and seek to replace the sector. The groups have been formed to Unmanned Aircraft System (UAS) Rules, address issues within: (i) operation and viability 2021.45 The Act regulates the production, of airlines, (ii) modernisation and capacity of possession, operation, and sale of civilian aircraft airports, (iii) cargo transportation and in India.46 The UAS Rules regulated the maintenance of operations, and (iv) skilling of ownership and operation of remotely operable human resources. All three groups will be and autonomous aircraft. The draft Rules seek to chaired by the Minister of Civil Aviation, and reduce the approvals and restrictions involved in include the Minister of State for Civil Aviation, operating drones. Key features include: the Secretary to the Ministry, and the Director General of Civil Aviation as members. The ▪ Increased weight threshold: Currently, the composition and functions of the groups include: UAS Rules are applicable to drones weighing less than 300 kilogram. The draft Rules ▪ Group of airlines: Other members of the increase this threshold to 500 kilogram. advisory group of airlines include representatives from seven airlines ▪ Removal of student remote pilot license: including Air India, Indigo, and Spice Jet. The UAS Rules mandate possession of a The group will advise the government on student remote pilot license before matters including: (i) enhancing domestic commencing any training. The draft Rules and international connectivity, (ii) do away with the need for a license for promoting passenger and cargo services, student remote pilot, and only mandate a (iii) ensuring viability of airlines, and (iv) remote pilot license for operating drones. leasing and financing of aircrafts. ▪ Regulation of airspace: Under the UAS ▪ Group of airports: Other members of the Rules, areas where drone operations are advisory group of airports include the Joint prohibited include: (i) a five km radius Secretary for the Ministry of Civil Aviation, around six major international airports, (ii) and representatives from the Airport different areas around border, civilian and Economic Regulatory Authority of India, military installation of strategic significance, Bureau of Civil Aviation Security, Airports and (iii) notified ecologically sensitive areas. Authority of India, and private operators The draft Rules remove this list and enable such as the GMR Group and Adani Group. the central government to publish a machine-

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readable airspace map for drone operations in Scheme providing subsidy to Indian India. The map would segregate the Indian shipping companies approved airspace into red, yellow, and green zones. Prior permission will be required for drone Shruti Gupta ([email protected]) operations in red and yellow zones. The Union Cabinet approved a scheme providing Comments on the draft Rules are invited by subsidy to Indian shipping companies applying August 5, 2021. for global tenders floated by central Ministries and Public Sector Establishments for import of Comments invited on draft central motor cargo.50 Rs 1,624 crore has been allocated for its vehicles rules; draft standard for implementation between 2021-26. Key features accreditation of testing agencies notified include the following: Rajat Asthana ([email protected]) ▪ Eligibility and registration: The following conditions for eligibility have been The Ministry of Road Transport and Highways established: (i) the ships must be released the draft Central Motor Vehicles manufactured less than 20 years before (Amendment) Rules, 2021.47 The draft Rules February, 2021, and (iii) the companies have been published under the Motor Vehicles must have been awarded the contract after Act, 1988 and seek to amend the Central Motor the implementation of the scheme. 48 Vehicles Rules, 1989. The Act regulates the ▪ Subsidy: Companies will be given subsidy grant of driving licenses, and standards for motor 49 based on the date of flagging (registration vehicles. The Rules mandate prototypes of all of vessels to a flag state) and motor vehicles to be tested to gain approval for manufacturing. The subsidy amount will be manufacturing. The Rules further specify that based on the difference between price these vehicles may be tested at recognised testing quoted by a foreign company and by an agencies. The draft Rules seek to notify a new Indian vessel. The subsidy can either be a standard for accreditation of testing agencies. percentage of the difference in price quoted, Key features include: or the actual difference, whichever amount ▪ General Requirements: The draft standard is lower. In case subsidy is offered based mandate the testing agency to demonstrate on a percentage difference in the price availability of appropriate testing quoted, the rate of subsidy offered will infrastructure, technically skilled workforce, decrease by 1% annually for five years. and proven testing record for compliance The Department concerned will be provided purposes. The accreditation certificate shall with direct subsidy. be valid for five years. ▪ Obtaining accreditation certificate: The draft standards propose to empower the Women and Child Development Secretary of the Ministry of Road Transport and Highways to appoint an assessment team, Shruti Gupta ([email protected]) with relevant domain expertise for assessing applications. This team will submit a report The Juvenile Justice (Care and after assessing the premises of the testing Protection) Amendment Bill, 2021 passed agency. After the on-site assessment is completed, the assessment team shall provide The Juvenile Justice (Care and Protection of a written report on the outcome of the Children) Amendment Bill, 2021 was passed by assessment. In case the report mentions non- Rajya Sabha.51 The Bill was passed by Lok conformity of the applicant testing agency to Sabha in March 2021. The Bill amends the testing requirements, the testing agency will Juvenile Justice (Care and Protection of be invited to respond to the outcome report. Children) Act, 2015. The Act contains Based on the outcome report and the provisions related to children in conflict with law reviewed responses of the testing agency, the and children in need of care and protection.52 Secretary will grant accreditation certificate. The Bill seeks to introduce measures for strengthening the child protection setup. Key Comments on the draft Rules are invited by amendments include: August 26, 2021. ▪ Adoption: The Act prescribes the procedure for the adoption of children by prospective adoptive parents from India and abroad. On the acceptance of the child by prospective adoptive parents, a specialised adoption

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agency applies to a civil court to obtain the Rajya Sabha passes Coconut Development adoption order. In cases where a person Board (Amendment) Bill, 2021 living abroad intends to adopt a child from his relative in India, he is required to obtain Shashank Srivastava ([email protected]) an adoption order from the court. The adoption order issued by the court The Coconut Development Board (Amendment) 54 establishes that the child belongs to the Bill, 2021 was passed by Rajya Sabha. The adoptive parents. The Bill amends this to Bill amends the Coconut Development Board empower the District Magistrate instead, to Act, 1979. The Act established the Coconut issue such adoption orders. Development Board for the development of the coconut industry. The Bill seeks to amend the ▪ Appeals: The Bill provides that any person composition of the Coconut Development Board aggrieved by an adoption order passed by to improve its management and administration. the District Magistrate may file an appeal Key features of the Bill include: before the Divisional Commissioner, within 30 days from the date of passage of such ▪ Functions of the board: Under the Act, the order, which must be disposed within four Board may recommend measures to improve weeks from the date of filing of the appeal. the marketing of coconut and its products in India. The Bill adds that the Board may also ▪ Serious offences: The Act provides that the recommend measures for improving the Juvenile Justice Board will inquire about a marketing of coconut and its products outside child who is accused of a serious offence. of India. Serious offences are those for which the punishment is imprisonment between three ▪ The Act allows the Board to finance suitable to seven years. The Bill adds that serious schemes, in consultation with the central and offences will also include offences for which state governments, to improve the quality and maximum punishment is imprisonment of increase the production of coconut. This more than seven years, and minimum would apply to areas where coconut is grown punishment is not prescribed or is of less on a large scale. The Bill amends this than seven years. provision to extend such financing to all coconut producing states. ▪ Designated Court: The Act provides that an offence against children under the Act, ▪ Changes to the management: Under the punishable with imprisonment for more than Act, the Chairman of the Board, who also seven years, will be tried in the children’s functions as the Chief Executive Officer court. Other offences (punishable with (CEO), is appointed by the central imprisonment less than seven years) will be government. The Bill bifurcates this position tried by any Judicial Magistrate. The Bill by providing for a non-executive Chairman proposes that all offences under the Act be and a CEO. tried in children’s court. For a PRS summary of the Bill, please see here. For a PRS analysis of the Bill, please see here. Cabinet approves continuation of various schemes under livestock sector package Suyash Tiwari ([email protected]) Agriculture Parliament passes a Bill to accord the The Union Cabinet approved the continuation of various schemes related to animal husbandry and national importance tag to NIFTEMs dairying till 2025-26, under a special livestock Suyash Tiwari ([email protected]) sector package.55 Under the package, all schemes of the Department of Animal The National Institutes of Food Technology, Husbandry and Dairying will be merged into Entrepreneurship and Management Bill, 2019 three categories: (NIFTEM Bill) was passed by Parliament.53 The ▪ Development Programmes, which includes Bill declares the following institutes of food the Rashtriya Gokul Mission, National technology, entrepreneurship, and management Programme for Dairy Development, and as institutions of national importance: (i) National Livestock Mission, NIFTEM Kundli, and (ii) the Indian Institute of Food Processing Technology, Thanjavur (to be ▪ Disease Control Programmes, which named as NIFTEM Thanjavur). includes the Livestock Health and Disease Control scheme and National Animal For a PRS summary of the Bill, please see here. Disease Control Programme, and

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▪ Infrastructure Development Funds, which include services that would, if ceased, affect includes the animal husbandry and dairy the safety of the establishment engaged in infrastructure development funds. such services or its employees. In addition, the government may declare any service as Rs 9,800 crore has been approved for the an essential defence service if its cessation livestock sector package for the period 2021-26. would affect the: (i) production of defence equipment or goods, (ii) operation or Stock limits imposed on all pulses (except maintenance of industrial establishments or moong) till October 31, 2021 units engaged in such production, or (iii) Shashank Srivastava ([email protected]) repair or maintenance of defence products. ▪ Strikes: Under the Bill, a strike is defined as The Ministry of Consumer Affairs, Food and cessation of work by a body of persons Public Distribution issued an order under acting together. This includes: (i) mass Essential Commodities Act, 1955 to impose casual leave, (ii) coordinated refusal of any stock limits on certain pulses till October 31, number of persons to continue to work or 56 2020. These pulses are tur, masoor, urad, and accept employment, (iii) refusal to work chana. The Act empowers the central overtime, where such work is necessary for government to control production, supply, maintenance of essential defence services, distribution, storage, and trade of essential and (iv) any other conduct which results in, commodities. Stock limits are generally imposed or is likely to result in, disruption of work in in order control the price of essential essential defence services. commodities when there is a sharp increase in the prices. ▪ Prohibition on strikes, lock-outs, and lay- offs: Under the Bill, the central government The stock limits are applicable in the following may prohibit strikes, lock-outs, and lay-offs manner: (i) 500 Metric Tonne (MT) for in units engaged in essential defence wholesalers (provided there should not be more services. The government may issue such than 200 MT of one variety), (ii) 5 MT for an order if it deems this to be necessary in retailers, and (iii) production during the last six the interest of: (i) sovereignty and integrity months or 50% of annual installed capacity, of India, (ii) security of any state, (iii) public whichever is higher, for millers. order, (iv) public, (v) decency, or (vi) In case the stocks held by an entity exceed the morality. The prohibition order will remain prescribed limits, they must declare them on the in force for six months, and may be online portal of the Department of Consumer extended by six months. The prohibition Affairs. The stocks have to be brought within will not apply to lay-offs made due to power the prescribed stock limit by August 19, 2021. shortage or natural calamity, or lay-offs of temporary or casual workmen. ▪ Strikes and lock-outs that are declared or commence before or after the prohibition Defence order will be illegal. Laying-off after the prohibition order will be illegal. Suyash Tiwari ([email protected]) For a PRS summary of the Bill, please see here. Essential Defence Services Bill, 2021 introduced in Lok Sabha The Essential Defence Services Bill, 2021 was Environment introduced in Lok Sabha.57 The Bill replaces an Ordinance promulgated in June 2021.58 The Bill Aditya Kumar ([email protected]) allows the central government to prohibit strikes, lock-outs, and lay-offs in units engaged in Bill to set up a Commission for air quality essential defence services. Key features of the management in NCR and adjoining areas Bill include: introduced in Lok Sabha ▪ Essential defence services: Essential The Commission for Air Quality Management in defence services include any service in: (i) National Capital Region and Adjoining Areas any establishment or undertaking dealing Bill, 2021 was introduced in Lok Sabha.59 The with production of goods or equipment Bill provides for the constitution of a required for defence related purposes, or (ii) Commission for better co-ordination, research, any establishment of the armed forces or identification, and resolution of problems related connected with them or defence. These also to air quality in the National Capital Region

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(NCR) and adjoining areas. Adjoining areas valid only up to its original validity period.62 have been defined as areas in Haryana, Punjab, Further, the new lessee is required to: (i) register Rajasthan, and Uttar Pradesh, adjoining the on the PARIVESH portal, and (ii) submit an National Capital Territory of Delhi and NCR, undertaking for compliance with all conditions of where any source of pollution may cause adverse the transferred environmental clearance.62 impact on air quality in the NCR. The Bill also PARIVESH portal is a web-based platform to dissolves the Environment Pollution Prevention obtain environmental, forest, wildlife, and and Control Authority established in the NCR in coastal regulation zone clearances.64 1998. An Ordinance establishing a similar Commission was promulgated in October 2020.60 It lapsed in March 2021 and was repromulgated in April 2021.61 The Bill repeals the 2021 Law and Justice Ordinance. Key features of the Bill include:59 Supreme Court passes judgement on the ▪ Functions of the Commission: Functions of Tribunals Reforms Ordinance, 2021 the Commission include: (i) co-ordinating actions by concerned state governments Aditya Kumar ([email protected]) (Delhi, Haryana, Punjab, Rajasthan, and Uttar Pradesh), (ii) planning and executing The Supreme Court passed a judgement on plans to prevent and control air pollution in several aspects of the Tribunals Reforms NCR, (iii) providing a framework for (Rationalisation and Conditions of Service) identifying air pollutants, (iv) conducting Ordinance, 2021.65 The Ordinance was research and development through promulgated in April 2021 to abolish nine networking with technical institutions, (v) tribunals and transfer their functions to existing training and creating a special workforce to judicial bodies (mainly High Courts).66 It also deal with issues related to air pollution, and amended the Finance Act, 2017 to prescribe the (vi) preparing action plans such as increasing terms and conditions of service for members and plantation and addressing stubble burning. the composition of the search-cum-selection committee.66 Earlier, these provisions were ▪ Penalties: Contravention of provisions of the notified in rules under the 2017 Act. Key Bill, or orders and directions of the observations of the Court include:65 Commission will be punishable with imprisonment of up to five years, or fine of ▪ Term of office: The Ordinance provides for a up to one crore rupees, or both. The Bill four-year term of office for tribunal members. excludes farmers from the scope of these The Supreme Court declared the provision to penalties. However, the Commission may be unconstitutional for violating past collect an environmental compensation from judgement of the Court, which specified a farmers causing pollution by stubble burning. five-year term of office. This compensation will be prescribed by the ▪ Minimum age requirement: The Ordinance central government. Appeals against the provides for a minimum age requirement of Commission’s orders will lie with the 50 years for appointment of Chairperson and National Green Tribunal. members of tribunals. The provision was For a PRS summary of the Bill, please see here. struck down for violating the principles of the doctrine of separation of powers. The Court Validity of environmental clearance in emphasised on its earlier judgement which cases of mining lease transfers revised recommended recruitment at young age by allowing appointment of advocates with 10 The Ministry of Environment, Forest, and years of experience. The Court stated that a Climate Change revised the validity of the minimum age requirement of 50 years will environmental clearance for mining lease prevent such appointments. transfers.62 Earlier, in case of transfer of an expiring mining lease, the environmental ▪ Manner of appointment: The Ordinance clearance was deemed to be transferred to the requires the selection committee to new lessee.63 In such cases, the clearance recommend two names for appointment to a remained valid till a new clearance was obtained post in the tribunals. The Court stated that by the new lessee.63 The new lessee was this provision violates the past judgement and required to obtain fresh clearance within two intrudes judicial domain. Earlier, the Court years from the date of grant of the mining lease. had specified that the committee must The amendments specify that in case of such recommend one name for a post along with transfers, the environment clearance certificates one name in the waiting list. This was meant will be deemed transferred, however, it will be to eliminate the discretion of the Executive in

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appointment of members, thus ensuring the Commerce independence of judiciary. Shruti Gupta ([email protected]) Supreme Court strikes down provisions of the Constitution (97th Amendment) Act Standing Committee submits report on Intellectual Property Rights regime Omir Kumar ([email protected]) Standing Committee on Commerce (Chair: Mr. The Supreme Court read down the Constitution Vijayasai Reddy) submitted its report on the (97th Amendment) Act, 2011 in relation to state subject ‘Review of the Intellectual Property cooperative societies.67 The Act added Part IX-B Rights (IPR) Regime in India’.70 IPR are rights to the Constitution to ensure autonomous and given to creators of goods gained from scientific democratic functioning of cooperatives.68 The development, artistic work, or original research, Act empowers the state legislatures to enact laws which give the creators exclusive right over its for incorporation, regulation, winding up of use for a certain period. Key observations and cooperatives. In 2013, the Gujarat High Court recommendations include: had struck down the Act on the grounds that it ▪ Investment in research and development: was not ratified by half of the state legislatures The Committee noted that India grants a low under Article 368 (2). It noted that since number of patents (which can be attributed to cooperative societies is a State Subject, the Act low spending on research and development violates the Constitution in absence of (0.7% of the GDP). It recommended: (i) ratification by state legislatures. allocating funds to each government The Supreme Court, while hearing an appeal department for research, (ii) providing upheld the Gujarat High Court judgement in incentives to private companies for relation to state cooperative societies. However, undertaking research, and (iii) directing large the court upheld the provisions of the Act in industries to grant Corporate Social relation to multi-state cooperative societies. The Responsibility funds for research. Court held that as multi-state cooperative ▪ National IPR Policy, 2016: The Policy was societies exist across states or union territories, adopted to provide the legal and these fall under the Union List, laid down in the administrative framework to manage IPR. Seventh Schedule of the Constitution. The Committee recommended reassessing its policies and giving state governments greater Cabinet approves continuation of scheme power in framing IPR policies, supervised by for development of judicial infrastructure the Department for Promotion of Industry Omir Kumar ([email protected]) and Internal Trade. ▪ Counterfeiting and piracy: To curb piracy The Union Cabinet approved the continuation of and counterfeiting, the Committee the centrally sponsored scheme for Development recommended: (i) implementation of of Infrastructure Facilities for Judiciary for the stringent legislation through strong inter- 69 period 2021-26. The scheme has been departmental coordination, (ii) increasing the operational since 1993-94. Under the scheme, capacity of enforcement agencies (such as the central government provides resources to the IPR cells in the state police), and (iii) state governments for construction of court establishing a method to estimate revenue buildings and residential quarters for Judicial loss from it. It recommended labelling Officers. The cost of the scheme is estimated to products as ‘patent pending’ (patent applied, be Rs 9,000 crore for 2021-26, of which Rs but not yet granted) to deter misuse and yield 5,357 crore will be provided by the central marketing benefits. government. During 2021-26, the funds will be used to develop infrastructure facilities in district ▪ IP Appellate Board: The Committee and subordinate courts. The funds will be used recommended reconsidering the abolition of to construct: (i) 3,800 court halls, (ii) 4,000 the IP Appellate Board under the Tribunals residential units for judicial officers, (iii) 1,450 Reforms (Rationalisation and Conditions of lawyers’ halls, (iv) 1,450 toilet complexes, and Service) Ordinance, 2021, as this may further (v) 3,800 digital computer rooms. increase judicial pendency. It recommended undertaking a Judicial Impact Assessment In addition, the government has allocated Rs 50 and consultations before abolishing it. crore for operationalisation of Gram Nyayalayas. Gram Nyayalayas ensure speedy and easy access ▪ COVID-19: The Committee recommended to justice system in the rural areas of India. waiving off patent rights for COVID-19 related drugs and vaccines temporarily, to

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address inadequate availability. It liabilities and restart their businesses. The recommended avoiding any delays in Committee noted that only around 50% of the invoking compulsory licenses on crucial total guarantee amount of three lakh crore drugs and vaccines in emergency like rupees has been issued to MSMEs. It situations in the future. recommended that: (i) banks should be more liberal in extending credit facilities and For a PRS summary of the Standing Committee separate counters should be opened to report, please see here. exclusively deal with MSMEs, (ii) benefits of the scheme should be extended to small traders/dealers, and (iii) credit guarantee MSMEs amount should be enhanced. For a PRS summary of the Standing Committee Shashank Srivastava ([email protected]) report, please see here.

Standing Committee submits report on Retail and wholesale trade activities to be the impact of COVID-19 on MSMEs eligible for classification as MSMEs The Standing Committee on Industry (Chair: Dr. Retail and wholesale trade activities have been K Keshava Rao) submitted its report on the included back in the list of activities eligible for subject ‘Impact of COVID-19 Pandemic on classification as Micro, Small, and Medium MSME Sector and mitigation strategy adopted to Enterprises (MSMEs) under the MSME 71 counter it’. Key observations and Development Act, 2006.72 In June 2017, these recommendations of the Committee include: activities had been excluded from this list.73 ▪ Impact of Lockdown: The Committee Enterprises are classified as MSMEs based on observed that a large number of jobs were composite criteria of annual turnover, and 74 lost and regular income of households investment in plants, machinery, or equipment. declined significantly during the lockdown The Ministry of MSMEs notified that the period. It also noted that no intensive study benefits to retail and wholesale trade MSMEs has been conducted by the Ministry of will be restricted to priority sector lending only. MSME to ascertain the actual losses incurred Under priority sector lending, banks (and foreign by the sector. It recommended the banks with at least 20 branches) are required to government to: (i) conduct a detailed study to devote 40% of net bank credit for certain priority assess the actual losses suffered, (ii) consider sector areas such as agriculture and MSMEs.75 a new National Employment Policy, and In general, MSMEs receive benefits such as explore the feasibility for a National interest subsidy on loans, credit guarantee, Electronic Employment Exchange, and (iii) capital subsidy for technology upgradation, build a skill-based database of job seekers for market development assistance, and protection job-matching. To boost employment against delayed payment.76 generation in the MSME sector, the Committee recommended: (i) investing in back-end services such as research and development, and (ii) promoting digital Culture marketing and e-commerce by MSMEs. Shruti Gupta ([email protected]) ▪ Stimulus Package: The Committee observed that the stimulus package announced by the government for MSMEs was inadequate. It Standing Committee submits report on was more of a loan offering and long-term development and conservation of solution rather than providing immediate museums and archaeological sites relief by improving cash flows. It The Standing Committee on Transport, Tourism, recommended the government to introduce a and Culture (Chair: Mr. T.G. Venkatesh) larger economic package. It also observed submitted its report on the subject ‘Development that the stimulus package has not percolated and Conservation of Museums and down properly to the micro and small Archaeological sites - Challenges and enterprises. The Committee observed that Opportunities’.77 Key observations and extra efforts need to be taken on this front. recommendations include: ▪ Emergency Credit Line Guarantee Scheme ▪ Conservation and preservation: The (ECLGS): ECLGS was launched under the Committee recommended museums to adopt Atmanirbhar Bharat Abhiyaan in 2020 to global best practices for conservation where support MSMEs in meeting their operational

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possible. It recommended the Ministry of Technology (NIFT).78 The Committee assessed Culture to establish a model process for the performance of NIFT in promoting education preservation of artefacts and maintenance of and research in fashion technology and examined archival records, which may help in ensuring the need of government support required by it. consistency, and benchmarking the work of NIFT is an institute of fashion education with contractors employed. seventeen campuses setup across the country. It was made a statutory institute in 2006 by the ▪ Use of technology: The Committee NIFT Act, 2006. NIFT provides professional recommended the use of specific technology human resources to the textile and apparel to improve maintenance of museums and sites. industry. Key observations and These include: (i) use of virtual reality in recommendations of the Committee include: galleries, (ii) central database of digitised artefacts and sites, and (iii) blockchain ▪ Recognition by University Grants technology to catalogue artefacts and sites. Commission (UGC): NIFT offers various degrees in undergraduate, post graduate and ▪ Staff and training: The Committee observed doctoral studies. The Committee noted that that museums are often understaffed, with these degrees offered by NIFT are not vacancies in ASI reaching 29%. While noting recognised by the UGC. It recommended that the upcoming Indian Institute of Heritage that this issue should be looked into and and Conservation may train more museum degrees offered by NIFT should be staff, it recommended the Ministry of Culture recognised by UGC. to increase budgetary allocation towards training of museum staff. ▪ Status of an Institute of National Importance: The Committee observed that ▪ Funding: The Committee encouraged funding NIFT has had a long-standing demand to be of museums and sites through donations, recognised as an Institute of National corporate social responsibility, and Importance. The Committee noted that sponsorships. To increase revenue, it granting status of an Institute of National recommended: (i) instituting pay-as-you-wish Importance would allow NIFT to take tickets, where visitors can pay money in advantage of the growing opportunities in addition to a minimum ticket price, (ii) the fashion industry. It recommended that enabling contributions to maintain a specific NIFT should be recognised as an Institute of artefact or ‘adopt a heritage’ scheme for sites, National Importance. and (iii) tours beyond public hours at higher prices. Public-private models for to manage ▪ Budgetary support: NIFT has received museums and sites may be piloted. various grants from the central government from 1986-87 to 2006-07. Since 2007-08, it ▪ Security: To ensure safety and security across received Rs 10 crore per year for a period of museums and archaeological sites, the five years which was gradually discontinued Committee recommended: (i) installing in the year 2013-14. The Committee noted security systems and surveillance cameras, (ii) that since 2013-14 NIFT has not been patrolling by armed personnel, and (iv) funded or given any grants to meet its undertaking a physical security audit for sites revenue and administrative expenses. It maintained by the ASI. It also recommended recommended that the Ministry of Textiles implementing a disaster management plan in should ensure adequate funding is provided every museum and ASI site. to NIFT. For a PRS summary of the Standing Committee For a PRS summary of the Standing Committee report, please see here. report, please see here

Labour Education Omir Kumar ([email protected]) Reservation for OBCs and EWS Standing Committee submits report on approved in All India Quota Scheme in functioning of National Institute of medical education Fashion Technology Omir Kumar ([email protected]) The Standing Committee on Labour (Chair: Mr. The Ministry of Health and Family Welfare Bhartruhari Mahtab) submitted its report on the approved 27% reservation for Other Backward functioning of National Institute of Fashion Classes (OBCs), and 10% reservation for

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Economically Weaker Section in the All-India Regulations for Academic Bank of Quota Scheme from 2021-22 onwards.79 The Credits notified central list of OBCs will be used for this reservation. The reservation will be provided at Rajat Asthana ([email protected]) the undergraduate (UG) and postgraduate (PG) level, for students of medicine and dentistry. The University Grants Commission (UGC) notified the University Grants Commission The All-India Quota scheme provides domicile- (Establishment and Operation of Academic Bank free merit-based opportunities to students for of Credits in Higher Education) Regulations, studying in medical colleges located in another 2021.84 The regulations establish an Academic State. All-India Quota consists of 15% of total Bank of Credits, which will be an online entity to UG seats and 50% of total PG seats in store student's academic credits from all government medical colleges. Note that the registered Higher Educational Institutions Central Educational Institutions (Reservation in (HEIs). It will enable a credit transfer Admission) Act, 2006 provided uniform 27% mechanism, which will allow students to reservation to OBCs in all central educational structure their higher educational degree as per institutions.80 However, this had not extended to their choice of time, place and level of learning. the All-India Quota seats of state medical and Note that the establishment of an ABC was dental colleges. proposed in the National Education Policy 2020.85 Key features of the Academic Bank of National Mission to achieve universal Credits include: foundational literacy and numeracy by ▪ Validity: Credits obtained by undertaking 2026-27 launched courses in registered HEIs will be eligible Rajat Asthana ([email protected]) for availing Academic Bank of Credits services from academic year 2021-22 The National Education Policy 2020 aims to onwards. The credits earned by students achieve universal foundational literacy and shall be valid for up to a maximum of seven numeracy in primary school by 2025.81 This years after crediting. Once the credits are implies that every child, by grade 3, must be able utilized, they will be debited from the to read with comprehension, write, perform basic student account. mathematical operations, and learn basic life ▪ Availability of ABC: The Academic Bank skills. To achieve this by 2026-27, a national of Credits will be available for: (i) courses mission named National Initiative for completed on online platforms like Proficiency in Reading with Understanding and 82 SWAYAM and NPTEL, or of any specified Numeracy (NIPUN Bharat) has been launched. university (ii) theory, practical and skill- The Mission specifies yearly targets for based credit courses, if offered separately, achieving learning outcome at various grade (iii) all learning modes including contact, levels. To track the progress of students, School- non-contact and futuristic learning modes. based Assessment and large-scale standardised ▪ Recognition: The Regulations mandate assessment will be conducted. Training for Academic Bank of Credits to facilitate credit teachers will focus on bridging the language 83 recognition and credit redemption for all barrier, and encouraging peer learning. A five- courses, chosen by the student. The opted tier structure will be in place for implementing for courses need not fall under any particular the scheme (at the national, state, district, block, subject domain. The Regulations mandate and school levels). The responsibilities at the that the credits earned and deposited with National level include: (i) preparing a list of the ABC can be used for redemption to the measurable learning outcomes, by subject for respective education level (certificate, each grade, (ii) preparing tool kits for measuring diploma, degree, or Post Graduate diploma). proficiency levels, and (iii) creating robust information technology systems to monitor and track progress of the mission. States would be responsible for (i) creating yearly action plans to Health achieve foundational literacy and numeracy targets, (ii) ensuring availability of adequate Aditya Kumar ([email protected]) number of teachers in each school at each grade, and (iii) identifying and working with partners. Comments invited on unified health interface The National Health Authority invited comments on the Unified Health Interface (UHI).86 UHI is

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one of the building blocks of the National Digital integration across states in India: (i) limited Health Ecosystem (NDHE). NDHE refers to the inter-state transmission lines due to eco-system of data and infrastructure aimed at concentration of solar wind energy sites in achieving universal health coverage using data certain regions of states or certain states, (ii) systems, and health infrastructure.87 It also aims increasing peak demand from new demand to ensure security, confidentiality, and privacy of sources (such as air conditioners and health‐related personal information. UHI is electric vehicles), and (iii) increasing aimed at enabling digital health services in this fluctuations in frequency and voltage levels eco-system. Key aspects of the UHI include:86 at regional levels. ▪ UHI architecture: UHI will be an open ▪ Power system flexibility: The report protocol for digital health services. Open recommended that states should leverage all protocols refer to a system where a platform possible sources to build flexibility in the offering services is not owned by a single power system. This includes ability of the entity. This ensures diverse service options system to respond to any variation in power from multiple service providers on the demand and supply by modifying platform. UHI will allow health service production or consumption. Key options providers to achieve interoperability in recommended in the report to ensure delivery of digital health services. flexibility include: (i) battery storage, (ii) smart-meters, (iii) demand forecasting ▪ UHI development, governance, and equipment, and (iv) inter-regional transfers management: National Digital Health and cross-border transmission lines. Mission (NDHM) will be responsible for Further, the report provides for a regional development, governance, and management level model and a state level model to of UHI. NDHM is the mission-based evaluate impact of increasing renewable initiative for implementing the digital energy and role of flexibility solutions in ecosystem for health care services in India. the country. A technical expert committee will be created For PRS summary of the report, please see here. to formulate, design, and publish initial UHI open protocols. These protocols will be adopted after a consultation with experts (from government, academia, and industry), and public. Communication Comments on the UHI are invited until August Omir Kumar ([email protected]) 23, 2021. Standard Operating Procedure released for personalisation of SIM cards The Department of Communications released the New and Renewable Energy Standard Operating Procedure (SOP) for 89 Aditya Kumar ([email protected]) personalisation of SIM cards. Personalisation refers to the loading of operating system including details from licensed telecom operator NITI Aayog report on renewables and keys into the chipset. The SOP will be integration in India released applicable to the telecom service providers and The NITI Aayog released a report on SIM manufacturers. Key features of the SOP “Renewables Integration in India”.88 include the following: Renewable integration refers to incorporating ▪ Personalisation Process: The operating generation, transmission, and distribution of system should be developed in a protected renewable energy in the mainstream power environment preferably within the country. system. The report recommends ways to Where operating system development is integrate the increasing share of renewable done for global customers outside India, its energy capacity. The report observed that the integration, security testing, and loading into solar and wind energy will contribute chipset should be done within the country. significantly to achieving renewables targets of The installation of an operating system on 2030 (450 gigawatt) in India. Key observations the SIM hardware should be done by the and recommendations include the following: SIM manufacturer within the country. ▪ Challenges with renewable integration: ▪ Security Controls: The mobile network The report highlighted following as key operator and SIM personalisation agency challenges in achieving renewables should prepare an organisation security

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policy for the SIM personalisation lifecycle. procedures for secure key management, and The security policy should include: (i) (v) incident management policies. physical security of SIM personalisation areas, (ii) maintaining operating system and data, (iii) disposal of operator specific data after SIM personalisation is completed, (iv)

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es/The%20Unmanned%20Aircraft%20System%20Rules/UA S%20Rules,%202021.pdf. 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You may choose to reproduce or Classification’, Master Directions, Reserve Bank of India, redistribute this report for non-commercial purposes in part December 4, 2018, or in full to any other person with due acknowledgement of https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx? PRS Legislative Research (“PRS”). The opinions expressed id=10497. herein are entirely those of the author(s). PRS makes every 76 Annual Report 2020-21, Ministry of Micro, Small, and effort to use reliable and comprehensive information, but Medium Enterprises, PRS does not represent that the contents of the report are https://msme.gov.in/sites/default/files/MSME-ANNUAL- accurate or complete. PRS is an independent, not-for-profit REPORT-ENGLISH%202020-21.pdf. group. This document has been prepared without regard to 77 Report No 294: Development and Conservation of the objectives or opinions of those who may receive it. Museums and Archaeological Site-Challenges and Opportunities, Standing Committee on Transport, Tourism, and Culture, Rajya Sabha, July 26, 2021,

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